Chaina v Presbyterian Church

Judgment 1The Defendants seek to tender a number of documents which are privileged by reason of either or both of sections 118 and 119 Evidence Act 1995. These documents are MFI 27 to 29. The Defendants contend that privilege has been waived by reason of the commencement of these proceedings and particular claims made in them. 2The purpose of the tender is not to prove the truth of the matters contained in the letters but to show that correspondence was passing between Mr and Mrs Chaina and their solicitors and that instructions were being sought by and provided to the solicitors in response thereto. The letters are concerned with proceedings that were then current between some or all of the Plaintiffs and third parties. The documents do not concern correspondence arising out of the present proceedings. 3Section 122(2) Evidence Act provides: Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120. 4In Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 the joint judgment said: [28] It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer's evidence as to advice given to the client will be received. [29] Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large. 5The Defendants drew particular attention to Mr Chaina's state of mind and to what was said by Allsop J regarding that state of mind and an implied waiver of privilege in DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499 at [126]: A pleading of state of mind is raised. It is accepted that there are opened for scrutiny by that pleading confidential and privilege communications materially affecting or contributing to that state of mind. The inconsistent act is the propounding of the issue which, it is accepted, opens up, or makes relevant, in the sense discussed by the majority in Telstra, an examination of the confidential communication. 6In Chen & Ors v City Convenience Leasing Pty Ltd & Anor [2005] NSWCA 297 Gzell J (with whom Bryson JA and Windeyer J agreed) at [38] approved the statement of Hodgson CJ in Eq in Wayne Lawrence Pty Ltd v Hunt [1999] NSWSC 1044 at [12] where Hodgson CJ was speaking of the majority judgment in Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152: Accepting that the decision of the majority in that case correctly interprets and applies s 122(1), it seems to me still that the question of whether the advancing of a person's state of mind is to be taken as consenting to the giving of evidence of confidential communication, or as waiving privilege, is a matter of degree in each case. It does not seem to me that the assertion of a belief must, in all circumstances, be taken as consenting to evidence being led of any legal advice or confidential communication that could be relevant to whether such a belief was held or the reasonableness of such belief. It seems to me that factors relevant to whether that consent is to be considered as having been given, or whether privilege is taken to have been waived, would include the significance of the belief to the case as a whole; the relevance of the reasonableness of the belief to the case as a whole; the probability or otherwise of the legal advice being relevant to the holding of that belief, or being relevant to its reasonableness; and in circumstances where the Court inspects the legal advice in question in order to make a decision, the extent to which the legal advice does in fact bear upon the holding of the belief or its reasonableness, and the extent to which the legal advice relevant to those matters is inextricably bound up with legal advice going to other questions as to which there has been no consent or waiver. It seems to me that, on the basis of all those matters at least, the Court has to make a judgment as to what is reasonable, and what is fair in the particular case. 7Mr Maconachie submitted that the reference by Allsop J in DSE to a state of mind arose in the context of an assertion of reliance upon something said to be done and the reaction to it. On the other hand, he submitted, in the present case a psychiatric disability is alleged which is not a core issue in the present proceedings as reliance was in a case such as DSE. 8In my opinion, a state of mind is not to be interpreted in a restrictive fashion. In Stamp v Stamp [2007] FamCA 420 the husband and wife had entered into consent orders relating to their property pursuant to s 79 Family Law Act 1975 (Cth). Both parties were legally represented during the course of negotiations leading to the filing of those orders. Subsequent to the making of the orders the wife filed an application to set aside the orders and asserted in her particulars: The wife also relies on the status of her health at the time she entered into the consent orders as affecting her capacity to provide proper instructions in relation to the proposed terms. 9A majority of the Full Court of the Family Court (May and Boland JJ), after reference to a number of cases including Mann v Carnell and DSE, said that there was a move away from considerations of general fairness with the focus being on the inconsistency of an act (at [54]). I note that the Victorian Court of Appeal still saw some place for fairness in certain cases: Secretary, Departments of Justice v Osland [2007] VSCA 96 at [19]. 10May and Boland JJ in Stamp also referred favourably to Commonwealth of Australia v Temwood Holdings Pty Ltd (2002) WASC 107 where Wheeler J said at [10] (a passage also referred to favourably by Allsop J in DSE at [121]) as follows: On the other hand, a party may necessarily put its state of mind in issue in the proceedings by, for example, pleading reliance upon some representation or other or by seeking rectification of the contract for mistake; or a state of mind may be put in issue by some evidentiary assertion which is clearly relevant to the issues between the parties. In these latter types of case, fairness clearly requires the waiver of the privilege in relation to legal advice which may have contributed to that state of mind. It is to be noted, however, that it is the conduct of the party who possesses the privilege which is capable of waiving it. It is not apparently open to another party to litigation to force waiver of a party's legal professional privilege by making assertions about, or seeking to put in issue, that party's state of mind (emphasis added). 11May and Boland JJ went on to conclude that since the wife proposed that her head injury produced a mental disability which affected her capacity to provide proper instructions to her solicitors when she agreed to consent orders it would be inconsistent with the maintenance of her usual right to procedural legal privilege and she must be taken to have waived her right to that privilege (at [57] - [60]). 12In my opinion, a number of other authorities are consistent with this approach including French J in State of Western Australia v Southern Equities Corporation Ltd (1996) 69 FCR 245 at 250. 13In the present case the Second Plaintiff claims to have suffered mental harm as a result of the negligence of the Defendants. In his Statement of Particulars dated 24 September 2012 he lists among his disabilities: 10. Diminished memory and poor concentration ... 13. Forgetfulness ... 19. Inability to think clearly. 20. Confused state and thoughts. ... 25. Severe impairment in all pre-injury activities. ... 43. Inability to learn or process new material and information. 44. Inability to give directions or make decisions. 14In his statement of 8 February 2010 Mr Chaina said at paragraph 367: During the period until the end of the coronial inquest, we had a number of people living with us in our home at Vaucluse and a number of others that would attend almost every day. Two of my sisters were living with us and Rita's brother and my brother spent every evening with us. Other members of the family spent between five and six evenings a week with us. I was completely unable to do anything over and above very simple tasks. I was hospitalised on a number of occasions and both Rita and I experienced significant health complaints. While I was determined to get to the bottom of the cause of Nathan's death, I was in hindsight of very limited use in this regard because of the state that I was in. At the time we had a full time housekeeper. Either that person or one of the members of our family effectively ran the household and ran our lives. It is to be noted that the coronial inquest commenced on 17 April 2000 and concluded on 7 July 2001 with findings being delivered on 18 September 2001. 15He also said the following in the same statement: [368] As a result of my incapacity, Danny Arraj took immediate steps to try and keep the venture capital project, the Donald Street acquisition and a multitude of other matters relevant to the product launches running. The day to day operations, which had been moved shortly prior to Nathan's death to premises at Ingleburn, were looked after, to the extent she was able, by Lilly Sukkar. Arraj attempted to keep the domestic and industrial launch project going, but almost immediately experienced difficulties. I recall him attempting to speak to me in relation to discussions that he had had with Joe Butta about the purchase of the Donald Street property, but I was unable to discuss anything with him. Due to the state that I was in at the time, I became extremely angry at any time that I was asked to deal with matters other than Nathan's death and found myself unable to discuss with Arraj even the most basic things. ... [383] In the period following the conclusion of the inquest into the death of Nathan, my mental ability did not significantly improve. I remained heavily medicated and continued to self medicate with significant quantities of alcohol. I rarely slept during the evenings as a result of the nightmares that I myself experienced but also due to Rita and Mathew's ongoing grief reactions. Rita spent most nights crying uncontrollably, either in Nathan's bedroom or in our bed. Mathew would invariably go to sleep before waking up screaming and either running into our room or having me go to his room. Often it was not until 4.00am or 5.00am in the morning that anyone in the household was able to get to sleep. This left me exhausted almost every day and I have no doubt contributed to my inability to do even simple things like pick a telephone up and have a conversation with someone. At various points, I recall getting to the point of being unable to even shower or brush my teeth. 16In his statement of 1 March 2013 Mr Chaina said this: [93] After the death of my son I have spent hardly any time in relation to business matters. [94] I remain in a state of chronic depression, with no energy to pursue work, social activities or engage in family functions. I spend most of the day either watching television or resting. I take drugs as needed and alcohol to numb my brain. 17A number of times in his evidence Mr Chaina said that he was unable to, or did not, provide instructions to solicitors after the death of his son. The following are some examples: (1)In relation to proceedings Deluxe brought Brambles Linen Service he gave this evidence (at T 621): Q. And you gave that firm instructions in order for those proceedings to commence against those defendants, did you not? A. I can't remember. I think I think my wife would look after that. (2)In relation to the same proceedings (at T 623): Q. Now, Mr Chaina, is it your evidence that you took no real active role in that litigation? A. I took active role. Depend when. 98 to until after the tragedy, then I was assisted by Nigel Dique. Like I was unable to function, so Nigel Dique was assigned to assist not only in this matter, but the other matter to clear-- Q. No, I'm asking you about this matter, Mr Chaina. Please don't tell us something else. Are you saying that you took no role in this matter after the events of October 1999? A. No. I said up to the tragedy, my wife was looking after the legal. And I said before, whatever she need, I supplied her with the information, or-- Q. But I'm asking you after? A. But after was-- Q. After October 1999, do you say you had a - that you participated in this litigation, or not? A. Yes. Q. You did? A. Yes. Q. You had a significant role in this litigation, did you not? A. From which part? What year? I need to know, because it's all done different. Q. Well, Mr Chaina, in order to prosecute this action in the District Court, you gave extensive evidence, didn't you? A. The evidence was already been compiled before the tragedy, as far as I was aware. (3)In relation to the litigation with Rushton (at T 728): Q. Mr Chaina, you were writing to Mr McCrohan in February 2002 giving him your complaints and instructions, were you not? A. No. (4)In relation to the same proceedings (at T 732): Q. Mr Chaina, just so we are clear as to what it is exactly you are saying, is it part of your case that you assert that as a result of the events of October 1999 and thereafter that you were unable to participate in activities which required you to either concentrate or to conduct your commercial affairs; is that your case? A. I don't I don't understand. I didn't I didn't understand, thank you, your Honour. Would you mind repeating the question again, please? QUESTION MARKED * READ BACK WITNESS: Yes. ... 18Mr Maconachie submitted that, if the Defendants submissions were correct, in any case in which psychiatric injury or psychiatric incapacity is claimed it would be inconsistent for a plaintiff to claim the privilege not only in respect of prior engagements in litigation but in respect of the very case before the Court. He submitted that this would be a considerable incursion into the essential quality of confidentiality, trust and confidence which is the centrepiece of the law of privilege that is for the benefit of the administration of justice as a whole. In that regard he pointed to what Deane J said in Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 extracted in Mann v Carnell at [19]: Once one recognizes that the principle underlying legal professional privilege is that a person should be entitled to seek and obtain legal advice without the apprehension of being prejudiced by subsequent disclosure of confidential communications and that the privilege is not confined to such communications as are made in the course of or in anticipation of litigation but extends generally to confidential communications of a professional nature between a person and his lawyer made for the purpose of obtaining or giving legal advice, common sense points to a conclusion that the principle should not be seen as restricted to compulsory disclosure in the course of such proceedings. 19He submitted further that even although Mr Chaina makes assertions of the type I have set out there should not be held to be an inconsistency with those matters and the maintaining of client legal privilege because that privilege is such a fundamental protection to a person. 20In my opinion, the claims made by the Plaintiffs, and by Mr Chaina in particular, identified in paragraph 13 above, and his evidence that he was incapable of conducting business transactions and litigation constitute what is probably the central issue in this litigation, namely the mental and emotional capacity of Mr Chaina to work and provide the services to DeLuxe and Proton in respect of which they claim. This evidence of incapacity includes his denials that he provided instructions or held meetings with solicitors. There is such inconsistency between those claims and that evidence on the one hand and the maintaining of the privilege on the other that it must be held that the privilege has thereby been waived. 21It is important to note also that the Defendants do not seek the prove the truth of the matters contained in the correspondence that passed between the Plaintiffs and any legal advisors but seek that the material be admitted to show only that, inconsistently with what has been asserted by the Plaintiffs, Mr Chaina was capable of providing instructions and that he did so. 22Mr Maconachie's argument concerning all cases involving psychiatric injury or psychiatric incapacity has a ring of the floodgates about it, but even if that is an inappropriate characterisation it can at least be answered by reference to the decision in Stamp and by what Wheeler J said in Temwood Holdings (paragraph 10 above). 23Further, as Hodgson CJ in Eq described in Wayne Lawrence (paragraph 6 above), in any such case the precise claims and evidence would need to be investigated and analysed as I have attempted to do in this case. If, as is asserted here and was asserted in Stamp, that the Plaintiff had sustained such injury that they were incapable of providing instructions it may be that such an assertion would be inconsistent with the maintenance of client legal privilege. However, a determination of inconsistency in the present case says little about the outcome in a different case with different facts. 24MFI 27 is a letter providing advice about an application made on behalf of Mr and Mrs Chaina to set aside a judgment obtained against them in the Local Court by Edward Rushton Pty Ltd. MFI 28 is a letter from Mr Chaina to solicitors complaining about the way his cases were being handled. MFI 29 is a letter from solicitors reporting on a conference held with the Chainas concerning litigation with Southern Tablelands drilling. 25MFIs 28 and 29 contain material clearly inconsistent with the claims and evidence of Mr Chaina that I have detailed earlier in this judgment. Privilege has been waived in respect of those letters. 26MFI 27 is in a different category. In many ways what is contained in it bears out the claims and evidence of Mr Chaina that he was unable to attend to his affairs and litigation in particular. Reference is made to his failures to do things which ought to have been done. Those failures resulted in an adverse decision on the application to set aside. I do not consider there is any inconsistency that results in a waiver of privilege. Further, the relevance of the letter is far from clear. 27For these reasons I consider that privilege has been waived in respect of MFI 28 and 29. They will become exhibits in the case. The tender of MFI 27 is rejected.